Income Investors May Be Rewarded with a Position in Intel
December 1, 2011
Please select the links below to view our equity and dividend reports on Intel (INTC): Premium Equity Report
AMR Files for Bankruptcy, as Expected
November 29, 2011
As expected, AMR Corp (AMR), the parent of American Airlines filed for bankruptcy protection Tuesday. We had been expecting the demise of the carrier as we outlined to our subscribers in our Best Ideas Newsletter. We encourage investors to not dabble in the firm’s shares after the filing today, as it is extremely likely that the shares will be cancelled (meaning current holders get nothing). It turns out we got an answer to our rhetorical question, “Is AMR’s Equity Practically Worthless,” sooner than we had expected. View our May call on AMR’s demise here. The firm flashed a 1 on our Valuentum Buying Index in May – July, which is the lowest possible ranking on our stock-picking scale. During bankruptcy, AMR
Earnings Ahead: Lululemon – We Don’t Expect an Implosion
November 29, 2011
Since Valuentum identified Netflix (NFLX) as a high flyer with a ridiculous valuation over the summer–and identified the valuation of AMR Corp (AMR), the parent of American Airlines, as practically worthless–we’ve been searching for other good put candidates for our Best Ideas portfolio, which continues to outpace the S&P by nearly 2000 basis points so far this year. We admittedly missed out on Green Mountain Coffee Roasters (GMCR), though we thought the name was anything but safe, and we have steered far away from Under Armour (UA) and LinkedIn (LNKD) on the long side. This brings us to another high flyer, Lululemon (LULU). When you consider both the price action and high short interest over the last several weeks, it looks like many investors are bearish on
Deere Reports Fantastic Fourth-Quarter Results; Outlook Even More Impressive
November 23, 2011
Farm-equipment maker Deere & Company (DE) reported strong fiscal fourth-quarter results Wednesday that revealed the continued health of the US farmer and demonstrated higher equipment shipment volumes and improved pricing. We’re comfortable with our long-term projections and are maintaining our $82 fair value estimate on the firm. Worldwide net sales advanced 20% in its fiscal fourth quarter, as the firm reaped the benefits of rolling out new products and strength outside of the US and Canada, where net sales were up 31% in the quarter. Equipment net sales in the US and Canada jumped 14% during the period. Both paces of growth were lower than the growth experienced for the full year, however. Revenue jumped 18% in its Agriculture &
Mixed Bag Yet Again in Collective Brands’ Third Quarter
November 22, 2011
One of Valuentum’s best ideas, Collective Brands (PSS) reported quarterly results on Monday after the close. Results, as has been the case for the last several quarters, were mixed. Payless domestic continued to shut down less profitable stores, which helped contribute to the segment’s 5% sales skid. Same store sales also fell 4.5% domestically, reflecting the slow economic recovery and Payless’ ties to low-end consumers. Internationally sales weren’t very good either. Sales only increased by 1.1%, and same stores sales actually fell in Canada. Operating profit in the segment fell by 55%. At the same time, it’s good to see sales growth at any Payless location. PLG Wholesale Blowing Away Expectations While the Payless business remains challenged, or frankly, bad,
LinkedIn’s Shares Hit Five-Month Low
November 22, 2011
We provide the theses behind our valuation calls on LinkedIn (LNKD) and Netflix (NFLX), the latter falling significantly in recent months, as predicted by our July note below (when Netflix was trading above $250 per share; it’s now under $70). We expect LinkedIn’s shares to continue to converge to our $55 fair value estimate in coming months (it’s trading around $70 per share). << LinkedIn Valuation: Completely Absurd, Significantly Overvalued << Netflix Valuation: Completely Absurd, Significantly Overvalued
Hewlett-Packard Reports Fiscal Fourth-Quarter Results; Outlook Well Below Expectations
November 21, 2011
Hewlett-Packard (HPQ) reported better-than-expected fiscal fourth quarter results after the close Monday but its outlook fell well below our forecasts for fiscal 2012. We are placing our fair value estimate for HP under review as we continue to evaluate the future direction of the firm (the future of its PC business, its strategy in Europe, and how it will compete in tablets). The firm’s non-GAAP net revenue fell 3% in the quarter (6% adjusted for currency), while non-GAAP net earnings dropped 23% as the firm faced 2.3 percentage points of non-GAAP operating margin pressure (non-GAAP operating margin was 9.7% in the quarter). Despite the reduced numbers, the results came in better than consensus estimates on both the top and
*New Book Review* The Smartest Money Book You’ll Ever Read: Everything You Need to Know about Growing, Spending, and Enjoying Your Money
November 21, 2011
Valuentum’s subscriber base enjoys reading the latest and greatest investing books. As a result, Valuentum requests and receives business and investing books before they are officially released. Our editorial staff took a look at the following book, and here’s what we thought after reading it: The Smartest Money Book You’ll Ever Read: Everything You Need to Know about Growing, Spending, and Enjoying Your Money By Daniel Solin. Perigee Trade, 2011. 304 p. ISBN 978-03995-3721-9. Book Release Date: December 27, 2011 The Smartest series by Solin includes The Smartest Portfolio You’ll Ever Own: a Do-it-Yourself Breakthrough Strategy, The Smartest Retirement Book You’ll Ever Read, The Smartest Investment Book You’ll Ever Read: The Simple, Stress-Free Way to Reach Your Investment Goals,
Salesforce.com Posts Mixed Third-Quarter Results; We’re Not Impressed with Profitless Growth
November 18, 2011
Salesforce.com reported mixed third-quarter fiscal 2012 results Thursday that showed excellent top-line expansion but very weak levels of profitability. We are maintaining our $120 fair value estimate. The firm achieved record quarterly revenue in the period, up 36% on a year-over-year basis. Deferred revenue growth, or sales to be recognized in the future, was a bit lower than top-line expansion in the period and came in at 32%. This suggests that revenue growth in the future may slow a bit from the current pace. Salesforce.com’s subscription and support revenues jumped 36%, while professional services and other revenues advanced 34%. On the bottom line, the results were less than impressive. On a GAAP basis, Salesforce.com registered a third-quarter net loss of $0.03
Target Posts Excellent Third-Quarter Results; Highest Quarterly Comp Growth Since Mid-2007
November 17, 2011
Target (TGT) reported strong third-quarter results Wednesday that showed strength in its US retail stores and improved bad debt expense at its credit card operations. We liked the quarter and are maintaining our high $50s fair value estimate. The firm’s US retail sales jumped 5.4% thanks to a 4.3% increase in comparable-store sales with the balance of the increase coming from new store expansion. The same-store sales increase was Target’s best showing since the second quarter of 2007. Segment earnings (EBIT) jumped over 14% thanks to a 0.4 percentage point improvement in segment operating margins, almost entirely driven by reduced SG&A expenses (as a percentage of sales). Though we liked the firm’s US retail performance, we were equally pleased with the company’s
